Hikma Pharmaceuticals (LON:HIK) used its 2025 full-year results Q&A to outline a renewed focus on long-term investment and decision-making, with management emphasizing that recent performance in Injectables reflected both near-term headwinds and a deliberate reset tied to higher spending on R&D, commercial resources, and capacity initiatives.
Leadership changes and management priorities
Chief Executive Officer Said Darwazah said his decision to return to the CEO role was driven by a belief that the company had become too focused on short-term wins, including an “over-focus” on Injectable margins. Darwazah said he stepped down from the chair position to concentrate fully on the CEO role for the next two years, aiming to provide stability and clear direction.
Injectables: reset year, margin outlook, and growth drivers
Management acknowledged challenges for the Injectables business in 2025 and 2026. Deputy CEO North America and Europe Khalid Nabilsi cited reduced CMO contribution as a key issue, noting that one major customer is shifting some manufacturing to domestic U.S. production—capacity Hikma said it cannot fully offer until the Bedford facility is ramped and commercialized in 2028. Nabilsi also pointed to delayed product launches and lower optimism around a small biosimilar component, including liraglutide.
On profitability, executives discussed the shift in Injectables margins from the mid-30% range to guidance of 27%–28%. Darwazah said the lower level is tied to stepped-up investment and should not be interpreted as a structural market change. Nabilsi said price erosion in the core business remained in the low- to mid-single-digit range, excluding two top products, and characterized market conditions as competitive but not abnormal.
Executives attributed the margin pressure to several factors, including:
- Higher R&D spending, with Nabilsi citing an increase of about $15 million year-over-year in Injectables R&D and another executive later referencing a roughly $45 million year-over-year increase in overall R&D spending;
- Increased sales and marketing investment, including expanded hiring in the U.S. Injectables commercial organization;
- CMO mix changes and reduced CMO volume from a customer shifting manufacturing locations;
- Greater use of third-party supply, which management said has increased over the last few years and is less profitable than internal production;
- Mix effects from growth in MENA Injectables, which management described as less profitable than U.S. and Europe Injectables.
Nabilsi said that excluding MENA, Injectables margins in Europe and North America are “north 30%.” He also said investors could consider the 27%–28% margin range as applicable for the next few years, though the company does not intend to reject sub-30% opportunities if they support profit and EPS growth.
Looking further out, management repeatedly pointed to 2027 as an inflection year and 2028 as a key timeframe for larger benefits from capacity and pipeline initiatives. Darwazah and Nabilsi said they expect a stronger outlook from 2027 onward, while emphasizing that 2025–2026 represent a challenging period.
Ready-to-use platform and TYZAVAN launch
Hikma highlighted its ready-to-use (RTU) platform as a longer-term Injectables growth driver. Hafrun Fridriksdottir, President, U.S. and Global Head of R&D, said the company has about 15 RTU products in its pipeline, with launches expected to begin in early 2028.
Bill Larkins, who leads the U.S. Injectables commercial business, provided detail on the TYZAVAN launch, describing it as a “system and a process change” for hospitals. He said vancomycin is widely used in the U.S. and that Hikma had already converted 13% of the overall gram market with an existing vancomycin RTU bag product. Larkins said the launch momentum is “very active and very encouraging,” but described adoption as a progression as health systems adjust workflows, systems, and protocols. He also said successful integration of TYZAVAN should help adoption of future RTU bag products.
CMO strategy: capacity buildout and potential “fourth division”
Management repeatedly pointed to CMO/CDMO as a growing focus, particularly tied to U.S. domestic manufacturing demand. Darwazah said Hikma is increasing capacity at its Cherry Hill plant by addressing bottlenecks and is working to modernize and re-engineer the Bedford site, which he described as central to larger CMO expansion.
Executives stressed that CMO programs typically require long lead times, including equipment procurement, installation, qualification, and FDA approvals. Darwazah said large CMO orders often anticipate delivery two to three years after signing due to tech transfers and regulatory steps.
Hikma said it is recruiting a head of CMO and described the desired profile as a senior leader with extensive industry experience, contacts, and strong negotiation capabilities. Darwazah noted that contract structure and pricing can significantly affect profitability, underscoring the importance of negotiation and contracting expertise. In response to a question about organizational design, Darwazah said CMO “could be a fourth division.”
Rx and Branded: momentum, CMO contribution, and pipeline updates
While much of the discussion centered on Injectables, management emphasized that Hikma has three divisions and said two are performing strongly. Darwazah cited MENA growth and improved performance in the Rx business, referencing margins “close to 20%” and prior commentary that Rx EBIT had improved significantly versus earlier targets.
On Rx, Nabilsi said CMO revenue is expected to be about 10% of the Rx business in 2025 and described a longer-term goal of reaching 20% by 2030. He said Hikma would not disclose customer names, but indicated the company is working with multiple customers and negotiating additional contracts.
Nabilsi also said base Rx products such as Advair and fluticasone continued to perform well, describing the business as stable early in the year. On sodium oxybate (Xyrem), management said it had renegotiated a better deal for this year and next year and expects improved profitability versus last year, when it had weighed on Rx results.
Fridriksdottir provided an update on nasal epinephrine, stating that an additional FDA-required study is ongoing and that Hikma plans to submit in the U.S. after a few months. She said the product was filed in the U.K. last year, will be filed in Europe, and that Hikma is in discussions to out-license it in Europe. She added that close work with the FDA could shorten the review timeline.
Separately, management said it expects to begin providing additional disclosure over time around segment margins excluding R&D, following the shift to centralized R&D budgeting, with a potential bridge of “with and without” R&D in future reporting.
In closing remarks, Darwazah said Hikma is taking quicker decisions, investing in people and capabilities, and remains confident in returning to stronger growth. He also referenced increased attention to how artificial intelligence could be implemented across the company to support performance.
About Hikma Pharmaceuticals (LON:HIK)
At Hikma we help put better health within reach, every day. By creating high-quality medicines and making them accessible to the people who need them, we help to shape a healthier world that enriches all our communities. We help deliver this by living our culture, delivering our strategy, and acting responsibly. We are a trusted, reliable partner and dependable source of over 800+ (as of Feb 2025) high-quality generic, specialty and branded pharmaceutical products that hospitals, physicians and pharmacists need to treat their patients across North America, MENA and Europe.
